American Well Corporation Q3 FY2025 earnings call

• Amwell's plan focuses on two work streams: enterprise-grade platform and efficient operations. Both rely on technology integration, especially AI infrastructure.
• Invested in AI, program integration, and data analytics. Divested noncore assets like Amwell Psychiatric Care (APC) and continues to focus on core initiatives.
• Market is shifting towards integrated solutions, and Amwell is positioned to fill the gap by offering a unified platform for clinical programs and vendors, enabling customers to use their own white-labeled experience.

For the third quarter, total revenue was $56.3 million, an 8% year-over-year decrease. Subscription revenue was $30.9 million, up 18% year-over-year and representing 55% of total revenue. Total visit volume was approximately 1.1 million visits, down 21% year-over-year. Amwell Medical Group (AMG) visit revenue was $21.2 million, 23% lower than the previous year. GAAP gross margin expanded to 52% compared to 37% a year ago. Operating expenses totaled $58.9 million, a 16% decrease year-over-year. Adjusted EBITDA was a loss of $12.7 million for the quarter, better than a loss of $31 million a year ago. For the full year, revenue is now expected to be between $245 million and $248 million versus the prior range of $245 million to $250 million. Adjusted EBITDA is in the range of a negative $45 million to negative $42 million versus the prior range of negative $50 million to negative $45 million.

• Full year revenue guidance revised to $245 million - $248 million from the prior range of $245 million - $250 million.
• Adjusted EBITDA guidance revised to negative $45 million to negative $42 million from prior negative $50 million to negative $45 million.
• Q4 revenue projected in the range of $51 million to $54 million, adjusted EBITDA between negative $15 million to negative $12 million.

• Macro economic uncertainty may affect health systems' IT budgets when evaluating technology investments.
• Minimal direct impact from tariffs, but macroeconomic factors could influence the market.

Q: Can you give color regarding how Amwell won the Florida Blue plan win and see similar opportunities going forward?

A: It was a competitive situation. Florida Blue and others understand the fragmentation and need for one infrastructure. Amwell's value points around integrated solutions and AI-driven programs led to the win and indicate future growth as AI-driven programs proliferate.

Q: Can you give insight into potential further divestiture of noncore assets and their timing?

A: There are legacy products like inpatient solutions. Focus is on shifting resources to core initiatives, and divestiture will be when it provides good value and focuses the company on core offerings.

Q: How is AI monetized and what about margin outlook?

A: AI increases platform value by improving patient experience, program traction, and rev share from partners. Margin influenced by software revenue mix; introduction of AI features not expected to meaningfully impact margins immediately.

Q: Have you seen impact on sales pipeline due to macro noise and economic uncertainty, and direct tariff exposure?

A: Amwell's solution addresses pain points and is seen as obligatory, so sales pipeline remains relevant. Tariffs have minimal direct impact, with only a tiny business line affected.

Q: How to prioritize factors for cash flow breakeven in 2026?

A: Client retention is #1. Divestiture of noncore assets helps focus on core initiatives. Growth initiatives on the product side are #2.

Q: Any areas or topics you would not want to partner where you would want to own outright?

A: As long as solutions are logistic, secure, and compliant, Amwell will integrate third-party solutions to help customers benefit and monitor value of implementation.